Withholding Tax Changes

There have been several changes to withholding tax requirements for employers, as seen below. Look for more details in the September 2018 edition of "Withholding ReveNews" that will accompany mailed September withholding returns and is available on DOR's website.

Electronic Filing Threshold Lowered

Effective January 1, 2018, Kentucky's tax law lowered the electronic filing requirement from 100 to 26 withholding statements (Forms W-2, W-2G, and 1099 Series). Therefore, employers and payers issuing 26 or more W-2s, W-2Gs, or 1099 Series forms are required to file electronically. Withholding statement reporting is due to DOR January 31, 2019, and no extensions are available.

New Form K–5—Kentucky Employer's Report of Withholding Tax Statements

Beginning January 2019, employers and payers issuing 25 or fewer withholding statements (Forms W-2, W-2G, and 1099 Series) must file Form K-5 or submit the information in the accepted electronic format. Paper copies of Forms W-2, W-2G, and 1099 Series received by DOR will not be processed and will not be considered filed. Form K-5 will be able to be electronically filed by clicking the submit button online, or it may be printed, completed, and mailed to the address on the form. Form K-5 may be used to report more than 25 withholding statements; however, clicking submit to file electronically is required. The 2018 Form K-5 will be available at:
https://revenue.ky.gov/Business/Pages/Employer-Payroll-Withholding.aspx.

Transmitter Report—Form 42A806

The transmitter report is now only used for CD submission of wage statement electronic data files. Electronic data files are only accepted in the EFW2 or Publication 1220 formats. A transmitter report must accompany all CD submissions of electronic files and must be mailed directly to DOR at the address on the form. The transmitter report is available at: https://revenue.ky.gov/Forms/42A806%20-Transmitter%20report%20for%20filing.pdf.

2018 Employer Withholding Tax Calculator

DOR created a withholding tax calculator for 2018 to assist employers with computing the correct amount of Kentucky withholding tax for employees. The calculator is in spreadsheet format so employers may use it for multiple employees, and calculations are based on the 2018 withholding tax formula. (DOR will release an updated calculator by January 1, 2019, for use next year.) The calculator is available at:
https://revenue.ky.gov/Business/Pages/Employer-Payroll-Withholding.aspx.

Electronic Filing of Withholding Statements

W-2 data files must be in the Social Security Administration's EFW2 format with state "RS" Records defined by DOR. EFW2 files may be submitted to DOR at
https://revweb.ky.gov/w2ftp/wfLogon.aspx or on CD with a Transmitter Report to the mailing address on the form. W-2G and 1099 Series data files must be in the federal Publication 1220 format with state "B" Records defined by DOR. Publication 1220 files must be submitted to DOR on CD with a Transmitter Report to the mailing address on the form.

Form K–4—Kentucky Withholding Certificate

Kentucky recently enacted a new flat 5% income tax rate. Due to this change all Kentucky wage earners will be taxed at 5% with an allowance for the standard deduction. The new Form K-4 is only required to be completed by an individual declaring exemption status or by an individual requesting additional withholding per pay period. All prior Form K- 4s are obsolete. The Form K-4 is available at:
https://revenue.ky.gov/Business/Pages/Employer-Payroll-Withholding.aspx.